Scott Radner, chief investment officer at Horizon Investments, expects the Fed to cut interest rates three to five times in 2024.
A group of influential business economists is expressing more optimism about the trajectory of economic growth. us economy In 2024.
The latest research from the National Association for Business Economics (NABE), released Monday, predicts stronger growth, lower unemployment and lower inflation, all components of “economic growth.”soft landing. ”
The median expectation is that gross domestic product (GDP), the broadest measure of goods and services produced in a country, will grow by 2.2% this year. This was a significant increase from the 1.3% figure business economists had predicted in their previous survey in November.
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A job fair sign on Fifth Avenue in Manhattan, New York City, September 3, 2021. (Reuters/Andrew Kelly/Reuters Photo)
“NABE Outlook panelists have significantly revised their 2024 U.S. economic growth outlook upwards,” said Ellen Zentner, NABE President and Morgan Stanley Chief U.S. Economist.
The improved forecast reflects “upward revisions to key sectors of the economy,” including: consumption expenditurebusiness investment, housing construction, and government spending.
Exactly one year ago, economists across the board were declaring that the Federal Reserve’s aggressive tightening policies could push the economy toward a deep and inevitable recession.
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Policymakers have sharply raised interest rates over the past two years, approving 11 hikes in hopes of curbing inflation. cool the economy. In just 16 months, interest rates rose from near zero to more than 5%, marking the fastest pace of tightening since the 1980s.
A pedestrian near the Treasury Building on December 30, 2022 in Washington, DC. (Photographer: Ting Sheng/Bloomberg via Getty Images/Getty Images)
Rising interest rates tend to raise interest rates on consumer and business loans, forcing employers to cut spending and slowing the economy. Rising interest rates have pushed the average interest rate on a 30-year mortgage above 8% for the first time in decades. Borrowing costs for everything from home equity lines of credit to auto loans and credit cards have also skyrocketed.
But the rapid rise in interest rates hasn’t stopped consumers from spending and businesses from hiring, leaving economists perplexed.
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The labor market continues to move at a healthy pace; Employers added 353,000 people New employees in January. The number of job openings remains high, and the unemployment rate continues to hover around 3.7%.
If the Fed cuts interest rates as currently expected, it could boost the economy later this year. Most experts believe policymakers will start cutting interest rates in June.
“Most panelists expected the Federal Reserve’s Federal Open Market Committee to begin lowering interest rates in the second quarter of 2024,” said Marvin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas and chairman of the NABE research committee. “There is,” he said.
